What is Bitcoin and Bitcoin Trading
Bitcoin Trading – Bitcoin can simply be described as digital currency, which is created electronically. Bitcoin enables a new payment system because it is a consensus network, which no one in particular controls. It is powered by the users and it is the first decentralized peer to peer network, which has neither middleman nor any other central authority. If we see Bitcoin from a user perspective, we can simply understand it as cash on the internet. But, it is different from the printed currencies like dollars and euros, as Bitcoin is produced by businesses and people who are running computers all over the world and using softwares that solve mathematical problems.
Bitcoin, coined the term of “cryptocurrency” and this concept was first introduced and described by Wei Dai 1998 on the mailing list of cypherpunks. He was the one to suggest the idea of a type of currency, which uses cryptography to control the currency creation and transaction by the users rather than from a central authority. Later, a man named Satoshi Nakamoto published the specification and proof of Bitcoin in the cryptography mailing list in the year 2009. The man left the project in late 2010 without revealing his true identity, but the community of cryptography has since grown and many dedicated developers have worked on Bitcoin.
Bitcoin is a cryptocurrency which is generated through a process called “mining”. Mining is when your computer processing power is used to solve exceptionally complex mathematical calculations called “blocks”. Once you decrypt a block, you can earn 50 Bitcoins. Solving of single block can solely depend on the power of your CPU and can sometimes take more than a year. However, you can take a simpler route and earn Bitcoin by exchanging it from physical currency to digital currency through online currency exchange sites.
At present, the trading in Bitcoin market occurs mainly on online Bitcoin exchange sites. These exchange sites operate by maintaining a liquid pool of Bitcoins and allowing people to withdraw their earned Bitcoin at any time. However, if the individual wish to engage in trade through Bitcoin, they can either do by making a wire transfer to their exchange bank account or by making a transaction through their exchange wallet. This allows them to trade Bitcoin credits with their physical currency. The individual is then free to limit or submit orders that are usually placed in the Bitcoin Trading order-book. The order that they have placed will be filled as soon as individual buy/sell orders can be matched to their corresponding one. Although most exchange sites only allow trading on a limited level, but some exchanges allow more complex orders such as to employ leverage or the option to go long or short on a stock.
How Bitcoin Trading Operate
As you buy one currency against another, Bitcoin trading operates in a similar way. The relative value of a national currency is determined by the country’s financial health and economic condition and therefore we notice that the value of the US dollar is worth more than Indian Rupee. The same applies with Bitcoin, except that the value of the currency is not determined by an industrial economic base rather than the quality of work performed by your computer. Therefore, we can say that Bitcoin can be traded like a commodity.
Also, we have determined that exchange sites like Mt. Gox act as intermediaries for currency transaction and they can trade Bitcoin credit into physical currencies and vice versa. Bitcoin trading through currency exchange allows users to earn money by tapping the opportunity of shifting values of various currencies and buying and selling them at the right time and this process is known as arbitrage.
Bitcoin Trading Platform
There are many Bitcoin trading platforms and online Bitcoin exchanges that allow Bitcoin traders and investors to engage in buying and selling of Bitcoin credits and other virtual cryptocurrencies. Some of the most popular ones are listed below:
Bitcoin Mining Software
Although, the Bitcoin mining as discussed above is carried out by the CPU, but there are Bitcoin trading softwares available that allows Bitcoin miners to be connected to the block-chain and Bitcoin mining pool. The software such as BFGMiner and MacMiner is responsible for both receiving the work after completion from miners and delivering the work to them. They also send the information back to your mining pool and block chain. There are many softwares available, but the best among them is one which runs on almost any operating system and after some modifications of drivers it can also work with Rasberry Pi depending on your mining setup. Bitcoin mining software is also responsible for displaying and monitoring general statistics such a fan speed, hash tag, temperature and average speed of the Bitcoin miner.
Bitcoin Wallet Software
The whole point of running Bitcoin mining software is to earn Bitcoin credit, but the question arises where to keep the cryptocurrency once you have earned it. There are many Bitcoin Wallet softwares available, which keeps your earned credit safe and secure and it is highly recommended over the hosted wallet like Circle or Coinbase. Below are some of the most popular Bitcoin wallet software listed that can be downloaded both on mobile and on desktop.
There are other softwares that helps you to buy and sell Bitcoin credits. You can use Kraken, which is the largest European online exchange site that offers Bitcoin exchange to Bitcoin traders and also offers same day SEPA (Single Euro Payments Area). Local Bitcoin is another great software that enables the user to connect with local people who are willing to trade in Bitcoins directly.
Bitcoin is the type of a digital currency where the encryption techniques are used to verify the transfer of funds and to regulate the generation of units. This whole system operates independently and does not involve central bank or any other control body. Bitcoin is most commonly regarded as cryptocurrency, a currency which consist of nodes that are being run by individuals who are connected to the internet and jointly forms a tight network.
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